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Afreximbank, Zimbabwean firms sign US$188m deals for energy, industry

Four Zimbabwean entities have signed over US$188 million worth of agreements with the African Export-Import Bank, with most of the new funding going into energy, the bank said Friday.

Afreximbank said it had signed loans worth US$188,600,000 with the power utility Zimbabwe Electricity Transmission & Distribution Company (ZETDC), as well as with CABS, CBZ and ZB Bank. The deals were concluded at the Intra-African Trade Fair (IATF2021) in Durban this week.

ZETDC secured a US$110.4 million syndicated term loan facility that will target revenue collection and infrastructure.

“The funds will help ZETDC to improve revenue collection through smart meters and prepaid meters and thus pay off regional creditors’ accounts,” Afreximbank said.

Earlier in the week, Afreximbank VP Denys Denya said part of the credit would be used to rehabilitate a ZESA plant in Mutare. He also said some of the money will be used for “on lending to the steel sector”, but gave no details.

Many of ZETDC’s customers are on post-paid meters and this means the company cannot effectively collect revenue. The utility owes over US$100 million to regional power suppliers, and by October was itself owed US$64 million by local customers, with mines owing US$37 million.

Erosion of Zimbabwe dollar electricity tariffs has weakened ZETDC’s ability to reinvest in its network and kept private power producers away. ZETDC estimates that, between 2010-2018, it lost value worth US$561 million due to what it calls “non-cost reflective tariffs”.

Afreximbank’s bank loans

CABS, ZB Bank and CBZ signed a combined US$78 million with Afreximbank.

CABS, the country’s biggest mortgage lender and a unit of Old Mutual, agreed a US$40 million loan to participate in a syndicated facility to import prepaid meters and pay off legacy debt.

The third transaction is a US$28.2 million dual-tranche facility agreed with CBZ Bank to fund raw materials for key industries.

ZB Bank also signed a US$10 million term sheet that will allow ZB to be one of the syndicated lenders in a facility for the energy sector.

“By providing adequate financing for power generation and transmission infrastructure, the facility will help companies in Zimbabwe’s mining, manufacturing and industrial sectors to increase their capacity, thereby contributing to exports and GDP, with a knock-on effect on employment levels and foreign exchange generation,” Afreximbank said.

Afreximbank has emerged as one the biggest lenders to Zimbabwe, which has been shut out by many international banks for over two decades. In March, Zimbabwe agreed to refinance its US$1,4 billion debt with Afreximbank, giving the country some breathing space on repayments.

In June, Afreximbank had total assets of US$23.6 billion and had loans of US$16.5 billion on its books. West Africa gets most of the bank’s loans, accounting for 36%. Southern Africa’s loans, including those to Zimbabwe, account for 21%, in third position after North Africa. Just over 53% of Afreximbank’s loans go to the financial services sector. NewZWire

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